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Indian Auto majors export more than they sell in India

In an year when the overall passenger car sales in India actually grew by 7.87 per cent, the fastest pace of growth since 2010-11, some of the OEMs actually ended up exporting more than what they sold in the domestic market. The same is true for three-wheeler companies like Bajaj Auto and TVS Motor, as well as two-wheeler maker Harley-Davidson Motor Company India.

Companies like Ford India not only registered a 35.86 per cent growth rate in exports to 110,840 units, but its exports also beat the company's domestic sales numbers by a high margin which stood at 79,944 units, registering a 6.36 per cent growth rate.

Auto industry analyst and partner, PwC India said Abdul Majeed said that Ford's Sanand plant has been primarily focussing on exports. The company exports the Figo hatchback and the Figo Aspire sedan apart from the Ford EcoSport sports utility vehicle (SUV).

A Ford India spokesperson explained, "At the beginning of every year, we draw a plan for production and sales as well as exports, which can also change as per market conditions. As of now, the segments in which we operate are not growing at a pace at which we would love them to. Therefore, we have been focussing on exports." As such while inaugurating its Sanand plant in Gujarat in 2015, the company had said that there were plans to triple exports from India over the next five years.

"We aim to position India as a global manufacturing hub. We started our Make in India journey with Chennai, and with Sanand, that commitment continues. As Sanand plant grows, we aim to triple our exports from India and to around 50 countries across the globe," he added. Ford India currently exports to around 40 countries.

Another US-based auto major and Ford India's neighbour in Gujarat, General Motors (which has a plant at Halol near Vadodara), has rather seen a huge jump in exports in 2015-16. The company registered a staggering 1,621.54 per cent growth in exports to 37,082 units during the fiscal, beating its domestic sales of 32,540 units which actually declined by 37.23 per cent.

Majeed explained, "Many of the automotive OEMs face stiff competition in the domestic market, especially in the small car and compact sedan space. On the other hand, there is demand for these products in some of their export markets, like African countries, East European and South American countries. Many have even managed to develop a good distribution network in these countries."

German car major Volkswagen India and Japanese auto maker Nissan Motor India too witnessed the same trend, of exports surpassing their domestic sales. Volkswagen's exports clocked a 16.92 per cent growth to 75,989 units while Nissan's exports actually fell 7.25 per cent to 111,612 units. Even after a decline, Nissan's exports managed to beat its domestic sales by a high margin. Its domestic sales had dipped 17 per cent to 39,389 units. Volkswagen's domestic sales too declined 8.72 per cent to 41,096 units.

Nissan's fall in exports is rather in line with the company's longterm strategy of garnering a 5 per cent market share in India and as the company has indicated in the recent past that its priority will always be the domestic market.

On the whole, passenger vehicles (PV) exports increased by 5.24 per cent during the fiscal as per data from the Society of Indian Automobile Manufacturers (SIAM), while the overall PV sales in India grew by 7.24 per cent. PVs include passenger cars, vans and utility vehicles.

Coming to three-wheelers, which grew by a modest 1.03 per cent in April to March 2015-16, companies like Bajaj Auto and TVS Motor Company saw their exports beating their domestic sales in numbers. Both the companies have been focussing on exports since long. "Bajaj has been focussing on exports for long, and so is TVS. This trend is likely to continue," Majeed said.

However, while Bajaj Auto's three-wheeler exports dipped 1.68 per cent to 280,000 units last fiscal, its domestic sales actually grew 8.8 per cent to 254,995 units. TVS Motor, on the other hand, registered a 5.39 per cent rise in export of three-wheelers to 95,285 units while its domestic sales dipped 11.47 per cent to 15,536 units.

Another multinational automotive player Harley-Davidson Motor Company India too exported 5,241 units of its bikes (up 63.78 per cent) more than its domestic sales of 4,708 units (up by 1.44 per cent).

The focus on exports is a long term strategy for most OEMs, and is largely seen as a de-risking model. "There are two ways of looking at it," says Majeed who feels that this trend of exports beating domestic sales is likely to continue. "One, its a de-risking model when domestic market demand dwindles. Secondly, foreign OEMs try to make better use of their Indian assets, and keep the local manufacturing profitable. And thirdly, the Indian OEMs who aim to be global majors, it is important to expand their footprint across the globe," he explained.